ABC: Romney has millions parked in funds in the Caymans

posted at 6:15 pm on January 18, 2012 by Allahpundit

A Twitter buddy reminds me that this is technically old news. The LA Times published a long, detailed piece about it in 2007. But then, Romney’s support for the mandate is also technically old news and yet Republicans care about it a lot more this time than they did last time. As the national debate changes, so do the issues that matter to voters. Go figure.

Does this matter?

In addition to paying the lower tax rate on his [domestic] investment income, Romney has as much as $8 million invested in at least 12 funds listed on a Cayman Islands registry. Another investment, which Romney reports as being worth between $5 million and $25 million, shows up on securities records as having been domiciled in the Caymans…

Romney campaign officials and those at Bain Capital tell ABC News that the purpose of setting up those accounts in the Cayman Islands is to help attract money from foreign investors, and that the accounts provide no tax advantage to American investors like Romney. Romney, the campaign said, has paid all U.S. taxes on income derived from those investments.

“The tax consequences to the Romneys are the very same whether the fund is domiciled here or another country,” a campaign official said in response to questions. “Gov. and Mrs. Romney have money invested in funds that the trustee has determined to be attractive investment opportunities, and those funds are domiciled wherever the fund sponsors happen to organize the funds.”…

Tax experts agree that Romney remains subject to American taxes. But they say the offshore accounts have provided him — and Bain — with other potential financial benefits, such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury. Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens.

Supposedly, Bain Capital maintains no fewer than 138 “secretive offshore funds” in the Caymans. To reiterate: No one’s claiming that Romney is using a tax shelter for his own money here. He’s paying the normal rate. (ABC’s headline is highly misleading on that point.) The claim, rather, is that the funds created by him and Bain operate as a tax shelter for other investors — specifically, per the LA Times piece, nonprofit institutional investors like pension plans and university endowments, which can avoid the 35 percent federal tax on “unrelated business income” by investing in an offshore hedge fund instead of a domestic one. Those investors get a little extra cash from that tax break plus higher foreign interest, Bain and Romney get some extra cash from higher management fees plus the profits that came from attracting additional investors, and everyone’s happy — except the IRS.

Which brings us back to the key question: Does this matter? Not as much as it would if Romney was sheltering his own dough, certainly, but it’s easy to imagine The One on the stump this fall talking about Mitt and his old company (whose profits he still shares in) making bank by helping others avoid the taxman while Joe Sixpack has no recourse but to pay up. If you think that’s a big nothingburger and are willing to go to war to defend perfectly legal tax shelters, okay, but this is yet another reason why we’d better see Romney’s tax returns now, not later. I appreciate Mitt not wanting to provide Democrats fodder for class-war demagoguery, but if we’re going to invest in Romney Inc in hopes of a big dividend in November, let’s see a prospectus so that we know exactly what liabilities we’re taking on. Read NRO’s new editorial for more on that.

Update: After re-reading the LA Times piece, it looks like I conflated two different funds above. It’s a shell company in Bermuda, not the Caymans, that helps institutional investors avoid certain taxes. The Caymans shell company is aimed at “shield[ing] foreign investors from U.S. taxes they would pay for investing in U.S. companies.” Same left-wing political attack applies — Bain and Romney are helping their wealthy clientele to avoid paying their “fair share” in taxes — but the specifics are apparently a bit different.

Update: ABC’s now changed the headline. It used to read “Romney Parks Millions in Offshore Tax Haven.” Minor problem: It’s not actually a tax haven for him. He pays the same tax on that money as he does on his U.S. investments. Now the headline reads “Romney Parks Millions in Cayman Islands.”

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They’ll never have a problem with the way Soros makes his money, for instance…unless he has a sudden epiphany and stops funding them.

cicerone on January 18, 2012 at 6:26 PM

This amazes me. Soros made his money wrecking my country’s economy, the UK, now he’s some kind of OWS saint?

Talk about hypocritical!

As to this stuff with Mitt’s money, I’m a Lib, and I don’t care. I’ve had an offshore account myself. You need an address in country for a normal account, I didn’t have one, so offshore was the way to go.

The real outrage is that ABC and its ilk will not point out such things about Democrats and the timing of Republican stories. Of course, the Cayman Islands is fixed in the public consciousness so its appearance in a statement about Romney is all that necessary to do damage.

This is not to suggest sympathy for Romney but it goes to show how great the media effort is to manipulate the outcomes to elections.

I could care less where he “parks” or invests his money. I’m sure he also has money “parked” in municipal bonds, on which he pays no income tax. And in business, where he pays capitol gains rates. All of this is not only legal, but beneficial to the economy, which is why Congress passed those tax laws in the first place. I only care when politicians don’t pay the taxes they owe … and that seems to be near epidemic with Democrats.

When every “journalist” at ABC, CBS, NBC, CNN and MSNBC pulling more than a million in salary and investments disclosed where they keep their money and if they have paid their taxes in full, and when those same “journalists” dig into where every liberal politician in DC keeps their money, and if those politicians have paid their taxes, and then do an in-depth look at where and how George Soros invests his personal money and if he’s paid all his taxes, I will care where Romney keeps his money. Until then, this just looks like more liberal bias trying to make a big deal where there is none.

I would be shocked if Romney didn’t have his money invested globally. I would be shocked if he didn’t have some offshore. So what? As long as he paid his taxes, I don’t care where he put his money after that. If he took advantage of tax loopholes when paying, no one should be blaming the person taking advantage of the available loopholes, but should be blaming the system that allows such loopholes. Nor am I going to get worked up over what Romney did while at Bain unless he broke the law. And I’m getting sick of the media trying to attach to him things that Bain has done since he’s left the company.

Not that I’m a fan of Romney, I’m just really sick of the liberal media spinning things without ever looking in their own political pool. They hypocricy of the left is beyond offensive.

… it’s easy to imagine The One on the stump this fall talking about Mitt and his old company (whose profits he still shares in) making bank by helping others avoid the taxman while Joe Sixpack has no recourse but to pay up.

Just add that to the many reasons why Mittens doesn’t represent anyone but himself and his puppet-masters.